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I recently had the opportunity to intercept a working TV that was on its way to electronics recycling. It was a pre-digital broadcasting TV, so it needed a converter box, which the previous owner passed on to me. My old TV, a 1977 vintage set, died back in 2008, and I never replaced it. The price (free) for the “new” set was just what I was looking for.
I don’t have cable, but I live in Roanoke County with a direct line-of sight to Poor Mountain, so I can get good reception on all major broadcast channels with rabbit ears. After hooking everything up, I was browsing around on a Saturday morning to see what was on and quickly discovered that nothing had changed over the last three years. It’s still a wasteland.
After skipping past some kids cartoons, I ran across some sort of farm report program. I think it was anchored by Al Falpha and Angus Hereford, but I may be wrong as I can’t really recall their names.
It turned out to be focused on agricultural commodity prices and this did get my attention because it turned out to be rather scary. It seems that corn prices are skyrocketing, and may get worse because weather in the northern plains states, a big corn producing area, has been too cold for farmers to plant.
The most recent corn price I saw, obtained from Congressman Bob Goodlatte last week, was $7.50 per bushel. Al and Angus didn’t mention what has driven up the price, but it’s clearly supply and demand and Congressman Goodlatte described what’s driving demand. What the Congressman told me, other than the latest price, wasn’t entirely new to me, however. Albert Epperly, a Bedford County beef cattle farmer, had already done a good job of educating me about this, and its negative impact on many local farmers..
The problem is ethanol.
It’s a problem because the United States has made ethanol a major part of its “energy policy,” such as it is. The government uses a tax credit to encourage companies to blend ethanol with gasoline and mandates to force the blending of a certain amount. It also includes a 54-cent-a-gallon tariff on imported ethanol to prevent it from competing with the American made stuff. The problem is that American-produced ethanol is derived from corn and this is what is driving up demand for corn.
Artificially driving up demand is fine for corn farmers, but it’s body slamming farmers who raise beef and dairy cattle, pigs and poultry by blowing their feed costs through the roof. It’s ultimately going to mean that you will be be paying even more for meat and milk. Oh, and don’t forget that corn is also an important human food crop.
Brazil makes ethanol from sugar cane, a much better source. It takes more energy, and water, to produce ethanol from corn and sugar cane is not the major food crop that corn is. But our tariff works against it, making sure that the ethanol we use comes from corn.
Playing favorites, helping some farmers at the expense of others, doesn’t seem to bother our government. Nor, does our government seem to care about the impact its “policy” is having on food prices.
Of course there are other factors, like the weather, that influence prices. I also saw an article in the Wall Street Journal a couple of weeks ago about how drought has hammered wheat producers in some states. Nevertheless it’s still a shame to see our government deliberately creating a market distortion to help a few at the expense of just about all the rest of us.